International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

The Effect of a Global Banking Crisis on Island Destination Image: The Case of Iceland
Thorhallur Gudlaugsson, Fridrik Eysteinsson

The 2008-2009 world economic recession had a profound impact upon international tourist arrivals and receipts. Tourism plays a bigger role in the economy of island destinations than in the economy of other tourist destinations and they are therefore, ceteris paribus, harder hit by global economic crisis. One of the island destinations hit by the crisis was Iceland. Compounding its difficulties was the fact that three of its largest banks went bankrupt. International media frenzy followed for many months because Iceland was the first nation to fall victim to the global economic crisis. The question remains if negative international media coverage having to do with a banking crisis has a negative impact on an island as a tourist destination. This paper focuses on one aspect of the global economic crisis, namely its effect on the image of an island destination among foreign tourists. The research is based on two surveys conducted in Iceland after the banking crisis. The results of these surveys are then compared to a benchmark survey conducted before the crisis. The main result is that, surprisingly, the image of Iceland as a tourist destination has not changed very much in the minds of foreign tourists.

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